This article is the first installment in a three-part series analysing the future of Australia’s electricity networks, and the federal government’s proposed National Energy Guarantee. You can read part 2 here.

Deregulate the energy market and go back to coal! Alan Moran, economist and well-known opponent of renewable energy, added these remarks to the most recent war of words between South Australia’s Premier Jay Weatherill and federal energy minister Josh Frydenberg, following the Premier’s announcement of a target to achieve 75 per cent renewables and a 25 per cent energy storage target by 2025.

In other words, if the market was left to invest in the lowest cost forms of generation, how would Australia’s electricity system change over the years to 2050?

In this article, the first of a three-part series, we consider both the investment trends clearly evident today and the national electricity emissions trajectory; especially in view of the fact that the Paris Agreement’s two degree goal implies Australia needs to reach zero net emissions by 2050 at the latest.

Along the way to the two degree goal Australia will achieve 75 per cent renewable electricity, making Premier Weatherill’s target a test case for the nation.

This article will be the first of three that examines the evolution of Australia’s electricity system to 2050 and the role of national policy-makers along the way.

New economic realities

In proposing a feasible trajectory for Australia’s generation mix and emissions intensity of electricity out to 2050, there are two clear premises:

The unit cost of electricity for new solar farms and wind farms is already well below the unit cost of electricity from a new coal-fired power station. A recent paper by Energetics lists some examples.

Figure 1: Coal-fired capacity to be withdrawn Source: “Integrated System Plan Consultation for the National Electricity Market”, AEMO, December 17

Figure 2 shows the resultant emissions from power generation in Australia along with the variable renewables fraction.

In deriving these results, we assumed that future power demand will follow the trend of the past decade and that the retiring coal-fired generators would be replaced by a mixture of variable renewables and gas-fired generators as the lowest cost alternatives.

We project that in the decade to 2030, two thirds of the new capacity will be provided by variable renewables with the fraction of new variable renewables rising to 90% in the 10 years to 2050.

Figure 2: The decarbonisation of Australia’s electricity

This ‘business as usual’ approach gets us closer but not close enough to the net zero goal – and is also fairly conservative. It results in residual emissions from the electricity sector in 2050 that equate to 33% of current electricity emissions.

One fifth of residual emissions will come from coal-fired powered stations that will not have been retired (12 Mt) and the remainder from gas-fired generators (48 Mt). Around half of the emissions from gas-fired generation are from assets installed after 2018.

Of course, considering new gas-fired generation as the only acceptable type of new dispatchable generation is unrealistic.

While gas might be the most competitive form of firming capacity in the short term, batteries have emerged as a genuine option, and pumped hydro storage has been in place in decades.

Should coal-fired power stations that reach their 50-year lifetime limit during the decade to 2030 be replaced by wind/solar firmed by gas with some battery storage (as AGL is proposing for Liddell), then emissions due to electricity generation will be around 147 Mt CO2-e or 25% below the corresponding figure in 2005.

This roughly aligns with Australia’s 2030 target under the Paris Agreement. Two questions therefore arise:

Why is the nation having such a heated debate when business as usual will see electricity make its proportional contribution to the government’s national emissions target?

What happened to our ambition to go beyond business as usual to reduce emissions?

Policy making 101

Decarbonisation of the electricity sector should be simple for policy makers.

For a start, they need to implement policies that 1) don’t make it hard for existing fossil fuel-fired power stations to retire, and 2) don’t encourage the installation of any new, expensive fossil fuel-fired power stations.

The NEG as it stands fails on both these points. We explore this issue over the next two articles in this series.

Dr Gordon Weiss is a Principal Consultant and Associate with Energetics. His expertise lies in energy and carbon policy development, renewable energy technologies and energy management in the resources sector. He has worked with a number of governments on the development of energy and greenhouse gas programs and policies, and is arguably one of Australia’s leading forecasters of emissions reduction trajectories.

18 Comments

The States and Territories are the ones actually leading the way despite all the ‘obstruction’ from the Federal COALition.

solarguy 1 year ago

But now the Feds have a new partner in crime…………the MARSHALL.

Joe 1 year ago

“Holler for a Marshall”….just not THAT Marshall! Saw Two Tongues Turnbull on last night’s news spewing his rubbish that the SA State election was a rejection of now ex-Premier’s Jay’s RE transformation….me thinks that The Two Tonguer needs to have a closer look at the election result.

neroden 1 year ago

Marshall has a majority of either 1 or 2 (not clear yet) and has a minority in the SA Senate. I don’t think he’s going to be able to reverse most of Weatherill’s policies — he can’t afford to lose a single vote.

Joe 1 year ago

I think that the punters have seen enough of the results of Premier Jays RE transformation to know that the benefits are real and should not be unwound. There is no turning off of the Elon’s Big Battery or the Sanjeev’s, ‘make the steel from solar’ plans.RE is cheaper and it is reliable which is in direct contrast to the old Coaler clunkers that keep tripping over themselves, are more expensive and destroying the environment. I live in Sydney and can I just say, thank you Premier Jay for showing the way forwards. Your good work will continue across the country despite The COALition roadblockers.

Glynn Palmer 1 year ago

South Australia does not have any reserves of high grade coal. Leigh Creek is a low grade resource.

Glynn Palmer 1 year ago

Labor increased its share of the 2 party preferred vote by 1% from 47% in 2014 to 48% in 2018. The Liberals democratically won more seats because there was an electoral boundaries redistribution.

Joe 1 year ago

Thank you Glynn. Of course the media don’t interrogate The Two Tonguer over the rubbish that he spits out. So perhaps you could kindly forward the ‘electoral truth’ to The Two Tonguer and also to the media so that the media can start doing its job.

The wind lobby under my bed 1 year ago

I believe the article reflects that: “…Australia needs to reach zero net emissions by 2050 at the latest.” The 65% is their interpretation of what business-as-usual looks like by 2050: “if the market was left to invest in the lowest cost forms of generation, how would Australia’s electricity system change over the years to 2050?”. So it’s clear we need an effective policy to make up the difference.

Helen Poulter 1 year ago

What the post doesn’t take into consideration is the rise in DER especiallly in the small commercial and industrial sectors. so depending on what happens here, how far will grid demand drop?

If you are referring to the large group that acknowledge the science then the ref I gave states the fundamental science. If you are referring to the shysters at some ‘national academies’ then it is likely that they are thinking about themselves and not science.

Mike Westerman 12 months ago

Struggle to be honest with yourself DAW – there is a tiny minority who ignore scientific evidence and consensus and cling to fringe ideas that deny AGW is a well supported proposition. As an engineer I tire of whacky alternative theories and ideas. If science is not good enough as practised by most engineers and scientists then crawl back into your cave and let the modern world sail past. Otherwise, if you rely on modern sanitation, energy systems, financial services, communications service, transport especially spooky things like aeroplanes etc then work thru your identity crisis and get on board the view that humans are rapidly making the world uninhabitable, and that needs to change.

daw 12 months ago

Absolute piffle Mike W I’m an engineer too but so what? you should read more widely and weigh up the difference between science and conjecture

Mike Westerman 12 months ago

I read and travel widely i assure you. But it takes only high school science to grasp the mechanics of greenhouse warming and to understand the mess humans are creating. Any engineer who fails to understand or accept human and particularly engineering responsibility for unbreathable air as experienced across south and north asia, the dramatic and well modelled shifts in hydrology and weather systems, the disaster that 8Mt of plastic wastes in pur oceans should be publicly shamed. We are compelled by our professional ethics to work for the benefit of society. We have failed profoundly .

daw 12 months ago

You have cast a wide net with your commentary so far Mike and your slur about crawling back into my cave is quite slanderous. I join with many scientifically minded people who haven’t just accepted the AGW conjecture but question it.
As recently as yesterday I read a reference ( see https://www.john-daly.com/forcing/forcing.htm) re testing that has recently been carried out on CO2 that again points to the whole AGW claim being grossly overstated.
[It certainly answers one of my concerns as stated by Malcolm Hughes (one of the conspirators in the Climategate Emails scandal) who said ….” Whilst CO2 is a good candidate to explain it (global warming) It is far from proven.”]
The reference above was on a post made on notrickszone.com with the heading:- Alarmism Takes A Big Hit…Flood Of New Scientific Findings Show Nothing Unusual Happening Climatically.
If you are genuinely open minded you should read not only that article but there are many more on various aspects of the great debate.